Auraria Membership

THE DEVELOPMENT OF OLD AGE SECURITY IN THE UNITED STATES
COMPARED TO POLICY DEVELOPMENTS IN GREAT BRITAIN
by
Jennifer Sue Gormley
B.A., University of Colorado, 1988
M.A., University of Colorado, 1994
A thesis submitted to the
Faculty of the Graduate School of the
University of Colorado at Denver
in partial fulfillment
of the requirements for the degree of
Master of Arts
Political Science
1994

This thesis for the Master of Arts
degree by
Jennifer Sue Gormley
has been approved for the
Department of
Political Science
by
Joel Edelstein
6 A
Oh-H
Date
Glenn Morris

Gormley, Jennifer Sue (M.A., Political Science)
The Development of Old Age Security in the United States Compared to Policy
Developments in Great Britain
Thesis directed by Professor Jana M. Everett
ABSTRACT
In the late 1800s, American and British citizens began to demand that their
governments provide social security. Many historical reasons caused this push for
social reform. Great Britain reacted sooner and more comprehensively to enact
welfare programs. Why did the United States lag behind Britain in adopting a
national plan for social security? A variety of theoretical frameworks can be
implemented to answer this question. Scholars have attempted to explain public
policy by isolating various factors: economic indicators, political power shifts, class
structure, or interest group pressures.
The theoretical approach of this thesis is to take many factors into account,
not limiting the analysis to one factor. Reviewing the predominant factors best
explains why the United States did not develop social programs sooner or to the
extent that Great Britain did.
m

The growing population of elderly is a major pressure to reform social
security today. Predictions of the future population of people over 65 indicate that
the system will be burdened to the point of collapse. The United States followed the
historical path of Great Britain in adopting the Common Law and developing poor
laws and pension programs. As a result, Great Britain is a model for the United
States when developing new programs. The successes and failures of Britains
National Health Service can be a guide for implementing social reform in the United
States. In response to the demands for social reform, the Clinton Administration has
proposed a comprehensive health care program. This proposal will undoubtedly go
through much of the same debates that NHS endured before it was passed.
This abstract accurately represents the content of the candidates thesis. I recommend
its publication.
Signed
IV

For my parents,
Jeanne and John Gormley

CONTENTS
CHAPTER
1. INTRODUCTION........................................ 1
2. THEORETICAL FRAMEWORK................................. 7
3. THE BRITISH CASE......................................20
History of NHS.......................................20
Funding and Availability of NHS......................36
Pros and Cons of NHS ................................36
4. THE UNITED STATES ENACTMENT OF SOCIAL SECURITY 40
Social Security Provisions...........................56
Medicare/Medicaid....................................60
5. CONCLUSION: EFFECTS OF THE HEALTH CARE SYSTEMS
ON THE ELDERLY IN BRITAIN AND THE UNITED STATES 69
Explanatory Frameworks...............................74
APPENDIX
A. TABLE A.l POPULATION OF BRITAIN AND U.S.A. 1850 1951 82
B. TABLE B.l THE BRITISH AND AMERICAN ECONOMIES ... 83
C. PRESIDENT ROOSEVELTS STATEMENT ..................... 84
BIBLIOGRAPHY...............................................85
vi

CHAPTER 1
INTRODUCTION
The number of citizens over 60 years old has been steadily increasing for
several decades. Research indicates that this trend will continue, resulting in a
major shift in demographics. During the 1970s, the median age rose from 28 to
30 years of age, while the total number of people over 65 years old increased by
28% (Chambers 1983). The numbers of citizens over 75 years old increased by a
startling 37% (Plesser, Siegel, Jacobs 1986). This shift in the age of the
population causes alarm for many observers.
In 1900, one in ten Americans was age 55 and over and one in 25
was age 65 and over. By 1986, one in five was at least 55 years
old and one in eight was at least 65. The older population grew
more than twice as fast as the rest of the population during the last
two decades (U.S. Senate Special Committee on Aging 1988, 1).
Growing concerns for adequate health and welfare are well founded. How the
community will handle the changes resulting from the growing retired population
is a question broadly speculated on today.
A significant issue facing older citizens is the worry that health care wont
be provided in later life, the dramatic increase in the number of older Americans
has begun to strain the health care system. Demographic trends suggest that the
1

increasing demand for services and support will continue. The group of citizens
over 85 years old is 20 times larger today than at the turn of the century. This
group now numbers 2.5 million and is expected to increase five-fold between 1985
and 2050. A major burden on the system will occur as the largest population
group, the "babyboomers" (those bom between 1946 and 1962), begin to reach 65
years of age. One in every five Americans (20 percent) will be elderly at that
time (Plesser, Siegel, Jacobs 1986, 27).
CHART 1.1
POPULATION 55 YEARS AND OVER BY AGE: 1900-2050
120-.
05
[100-
1900
1
II jlf
11 m V I
1 1 i m
1910
1920 1940 1960
1930 1950
1980
1970
YEAR
2000 2020 2040
1990 2010 2030 2050
SOURCE: Taueber, Cynthia M U.S. Bureau of the Census. 'America in Transition: An Aging Society." Current Population Reports
Series P-23. No. 128 (September 1983) (for years 1900-1980).
Spencer. Gregory, U.S. Bureau of the Census. "Projections of the Population of the United States, by Age. Sex. and
Race: 1983 to 2080." Currant Population Reports Series P-2S. No. 952 (May 1984) (for years 1990-2050).
The death rate for both men and women has fallen significantly. "From
2

1940 to 1980, the elderly death rates decreased by 27 percent to 53 deaths per
1,000 population" (Plesser, Siegel, Jacob 1986, 11). The major causes of death
among elderly people (cancer, heart disease and stroke) have been sharply
curtailed through technological advances.
This shift in population has also been impacted by lowering birthrates.
Since the "baby boom" it has become impractical to have large families. Past
trends of high birth rates have all but been eliminated due to the cost of raising
children and the social shifts that discourage multiple births. In the past, large
families were a necessity of survival, but today the family unit is smaller, more
spread out and less dependent. Individuals and families rely more heavily on
society and available resources for survival. Improved technology and
communication have permitted more independence. However, dependence begins
to return with old age, and the question arises: will society be able to support and
care for the elderly citizens, or should the family unit shoulder the responsibility?
Growing concerns about the availability, costs and quality of health care in
the United States have ignited a call for reform. Alternatives to the current health
care system have been a major subject of discussion. The Clinton Administration
is strongly pushing for health care reform. Their design includes a tax funded
comprehensive health care insurance package that gives all citizens access to
3

adequate health care. Many lawmakers have called for a nationalized health
service, while others have suggested alternative insurance programs, including a
federally funded tax credit for health care. Currently, the issue of U.S. health
care is a politically charged hot topic, and a real demand for change can be seen
through the U.S. society.
These sentiments for change are not new to the United States agenda. In
the early twentieth century industrialized nations had strong political movements
advocating social insurance. Great Britain responded to the movement by enacting
a comprehensive mandatory national insurance program beginning in 1911 and
later significantly amended in 1946. In 1946 the National Health Service Bill was
introduced to parliament and by July 1948 the new program began. In contrast,
the United States resisted the call for reform until the desperate times of the great
depression forced enactment of social security. Although the United States did
eventually adopt social security in 1935, it was a limited program and did not
provide comprehensive health insurance for all citizens. Why did the United
States and Great Britain react differently to the call for reform?
Older Americans have historically higher health care needs and lower
financial income. Most senior citizens rely on Social Security and other insurance
programs to pay the bulk of their health and survival needs. A demographic shift
4

increasing the numbers of the aged has been occurring worldwide which has
contributed dramatically to the concern for changing the current system. At the
present rate of increasing health care costs and the growing number of senior
Americans, many believe social security will soon be exhausted.
What alternatives are available? Some law makers and citizens look to a
nationalized health care program. The British system of nationalized health care
is often an alternative of choice. Great Britain enacted a health care system that
has provided care for its citizens through a general tax fund. The successes and
failures of this system are a good source of study and provide relevant and
important examples.
In the early twentieth century, the United States and Great Britain were
similarly situated in population, economics and industrial development.1 Both
countries had social movements calling for governmental protection of citizens.
Old age pensions, unemployment compensation and health insurance were some of
the major issues raised in this period. Why did Great Britain develop social
insurance programs as a direct result of the early movements, and the United
States not respond until after the great depression of the 1930s? Why did Great
See Appendix A Population of Britain and U.S.A. 1850-1951 and Appendix B -The
British and American Economies in the Nineteenth Century.
5

Britain enact a comprehensive tax funded health care plan for all in 1946 and the
United States enact limited health care plans (for the elderly, disabled and poor) in
1965 funded partly by insurance and partly by taxes? What factors influenced
these countries and caused their divergent paths? In the face of increasing
numbers of elderly citizens and overburdened social systems, will the United
States respond more comprehensively to the call for reform?
Theorists have different ways of analyzing social reform. Some isolate
specific issues that cause social reform, while others examine many factors that
contribute to the changes in society. Chapter two is a discussion of the various
theoretical frameworks that theorists use and an explanation of the approach this
thesis has employed. In an attempt to answer some of the above questions, it is
necessary to understand the historical background of Great Britain and the United
States. In chapter three, the British experience of social reform will be explored.
Chapter four follows with the American experience. Finally, chapter five wraps
up the discussion with a comparison of both systems, an analysis of why these
countries developed social insurance programs at different times and some
speculation on whether the United States is likely to develop nationalized health
insurance now, eighty-two years after Great Britain.
6

CHAPTER 2
THEORETICAL FRAMEWORK
When comparing public policies, important questions include why and how
the policies are developed. The answers to these questions depend in large part
on the methodology of analysis. The typical approach of researchers is to operate
from a particular theoretical perspective that helps to explain the causes of action
or inaction in a society, with an ultimate goal of finding predictors of the future.
The perspective determines what factors are seen as shaping the development of
the public policy. For example, in the field of comparative public policy some
theorists view the state as an entity affected and changed by outside forces which
in turn defines the social policies, and other theorists see the state as an integral
force affecting social change from within.
Which theoretical framework is the most useful and applicable in the
comparison between Great Britains development of National Health Insurance and
the United States development of the Social Security System? The answer to this
question lies in an understanding of the various theoretical approaches, which the
following discussion Will help to explain. This discussion relies significantly on
the contributions of Weir, Orloff, Skocpol (1988), Heidenheimer, Heclo, Adams
7

(1990), Evans et al. (1985), Wilensky (1975) and Skocpol (1992).
Historically, political scientists have studied public policies in an attempt to
define the sources of change and stability in the political system. Early political
theorists observed comparisons between different forms of political entities from
monarchy to oligarchy. These theorists pondered how a particular kingdom
functioned better (or worse) than another: was it the strength of the monarchs
own interest or the reaction of the monarch to outside influences? Aristotle
studied and compared constitutions of over one hundred city-states in an attempt to
define general political principles. Examples of political theorists comparing
political policies are abundant throughout history.
In more recent times the study of comparative public policy has taken on
more distinctive characteristics. These studies are molded by an underlying
framework that dictates the direction of the research and influences the overall
analysis. Each of the available frameworks offers the researcher abundant
educational opportunities, but each is as different as the course of study one might
choose in college. These frameworks all help to explain the complex relationships
intertwined in comparative public policy.
Socioeconomic theories and the logic of industrialism dominated early
modem comparative policy studies. These studies were built on the understanding
8

that nations react with similar policies to the process of economic growth and
social modernization (Cutwright 1967). This theory suggests that as a nation
grows economically, its government programs and welfare state will also grow.
"Economic growth is the ultimate cause of welfare state development" (Wilensky
1975, 24). This economic framework is based on statistical models, not based on
historical methods. According to this framework, financial resources are the
biggest influencing factor on state policy, over and above ideological components.
In other words, the state will not respond to the ideological call for a welfare
policy if economic development is not high enough to support such initiatives.
This theory is similar to the Keynesian theory in that it dismisses the role
of political forces, suggesting that nations respond to economic growth and social
modernization more so than to vested interests. The "power of vested interests,"
Keynes wrote, "is vastly exaggerated compared with the gradual encroachment of
ideas....The ideas of economists and political philosophers, both when they are
right and when they are wrong, are more powerful than is commonly understood.
Indeed the world is ruled by little else" (Keynes 1964, 26). Keynes believed that
the market was the best indicator of needed public policies and whether those
policies were financially feasible.
This theory suggests that as a country becomes more industrialized and
9

modem, increasing numbers of people relocate into urban areas, relying less on an
agricultural lifestyle. With industrialization, the country becomes more
economically powerful; therefore government responds with social insurance and
pension programs. If this theory is accurate, than why did the U.S. not
implement social policies like health care, during boom years? The economic
productivity of the U.S. is not the only source of change; it simply provides the
basis of the economic position of the country and times of increased ability to
afford social policies. Theda Skocpol (1992, 14) asserts the following:
In the final analysis, socioeconomic modernization not only is a
poor predictor of the timing of enactment of social policies across
nations and across states within the United States; it also says little
about the content of specific national or state-level policy profiles,
ignoring the particularities of program constituencies and the public
rhetoric used to legitimate them.
The notion of dismissing political ideas over economic influences was not
sustained for long. Many theorists expounded on the belief that outside
influences, other than economic, have a great impact on public policy
development. Class struggles, cultural values and party politics were just some of
the noted influencing factors. At the time socioeconomic theories flourished,
another school of thought was predominant and the polar opposite of the economic
theories. This camp came to be known as the cultural values approach.
10

P.R. Kaim-Caudle (1973), Anthony King (1973), Gaston Rimlinger (1971)
and others theorized that cultural perspectives and traditions have a great impact
on the development of public policies. These scholars are convinced that a
correlation exists between major cultural traditions and the rationales of social
policies. "The cultural values approach distinguishes, for example, the tradition
of laissez-faire liberalism of Anglo-Saxon nations from the statist paternalism of
Continental European countries or the familial quality of organizational life in
Japan" (Heidenheimer 1990, 64). This framework suggest that the historical
cultural values and traditions of a society are not easily changed and they continue
to influence the direction of public policy development. This approach accepts
many underlying principles of the socioeconomic theory, but it adds the
perspective that values and ideologies can facilitate or delay action by the state to
implement social policies (Rimlinger 1971). Unlike studies based on economic
theories, those using the cultural values approach do not depend on statistics;
instead, they rely on historical comparative analysis. This theory contends that
liberal values were a necessary element for the passage of social insurance in
America. Rimlinger (1971) points out that it was not until the great depression
revealed the defenselessness of the American citizens, that the liberal values
became strong enough to pass social insurance policies. The American belief in
11

I
independence was eased out of fear to permit more liberal ideas into the political
arena.
In rebuttal to the cultural values approach, Margaret Weir, Ann Orloff and
Theda Skocpol (1988) in their book The Politics of Social Policy in the United
States explain that the cultural values approach is good at demonstrating what
happened, but it fails to show how the policies and structures developed. Weir,
Orloff, Skocpol (1988, 12) state, "Arguments like Rimlingers about national
values offer a credible general gloss on what happened, but they do not consider
the subtlest value related questions about the origins and the structure of U.S.
social policies." Cultural value critics go on to argue that the theory is flawed
because, if liberal values made it possible to adopt social insurance in America,
then why was health insurance left out? Certainly liberal cultural values supported
the adoption of adequate health care for all citizens as a matter of right. These
arguments suggest that other factors influence the development of public policy,
and perhaps cultural values are only part of the reason policies are developed.
According to Skocpol (1992, 17), "Arguments about national values are too
holistic and essentialist to give us the explanatory leverage we need to account for
variations in the fate of similar proposals.
The opposing theories discussed above began to give way to several new
12

perspectives that incorporated other factors. One such factor is the political party.
Political forces are major influences in public policy outcomes according to those
following the party government framework. This framework emphasizes partisan
control of government. Unlike the socioeconomic theories, this new approach
views politics as essential in understanding public policy formation. The
development of public policies is hinged on which political party favors the policy
and whether that party is in power. V.O. Key (1942, 57) argues, "This approach
was used, for example, in some of the earliest comparative policy studies in which
American researchers sought to show that welfare policies differed depending
upon Republican and Democratic control of American state governments." The
party government theorist would suggest that the development of Great Britains
National Health Service (NHS) was dependent on the Labour Party being in
power. However, a counter argument to this is that the Labour Party did not
ratify the NHS; instead it was actually the Conservative Party that finalized the
NHS into law. The theory that party government does influence development of
public policy is plainly evident when power politics and bipartisan bickering make
or destroy a political agenda. The argument that political parties control public
policy is short sighted in that it does not consider the vast influences that enable
change.
13

Relating to the party government theory is the political class struggle
model. This model suggests that policy development lies in the battle between
business forces and workers. In his book, The Political Economy of the Welfare
State. Ian Gough (1979) suggests that policy development is dependent on the
political organization which is most powerful and influential. The organization
could be a labor union or a business force driven by capitalist accumulation; the
strongest force influences public policy. Thus government programs are the
product of powerful social factions organized to affect change. This theory is also
referred to as the social democratic model. The model places emphasis on the
political organizations of labor that are enhanced through political party
involvement, thus extending their field of influence. Commonly the Social
Democratic parties work in conjunction with labor organizations, enhancing policy
agendas that favor the working class (Shalev 1983; Korpi 1983). John Stephens
(1979, 89) stated, "The welfare state is a product of the growing strength of
labour in civil society."
The neo-corporatist framework expands on the political class struggle
model by suggesting that a broad system of interests (not just labor) influence
policy making. Organized interest blocks have the capacity to influence the
framing, coordinating and successful implementing of policy. Not just labor
14

groups influence public policies, but groups such as the National Rifle
Association, National Organization of Women and the religious right (to name a
few) can have a dramatic impact on policy development. In this theory and in the
political class struggle theory, the strength of group depends on economics and
numbers of members. The biggest group with the most money has the strongest
ability to influence politics.
Another perspective is the welfare capitalism theory. This theory
emphasizes big business as the major influence on social policies. In fact, the
proponents of this framework suggest that policies are the product of enlightened
business interests. The corporations in a polity observe the needs of business and
the market; therefore, appropriate public policies necessarily are developed. The
suggestion that business is the major force in public policy development causes the
critics to quickly point out that corporations have been major opponents to many
policy agendas. Skocpol (1992, 28) elaborates:
No matter how adaptable American capitalists have proven to be
after the fact, the historical evidence is overwhelming that they have
regularly opposed the initial establishment of new public policies
that (in their perception) would either interfere with managerial
prerogatives or in any way raise the cost of doing business. As a
consequence, forces other than U.S. capitalists have propelled the
development of American social policies that embodied significant
extensions of governmental regulation, taxing, and spending.
15

As Skocpol correctly points out, business is a force in public policy; however, it
is more often an opponent to social change than an advocate of political agendas
which support the welfare state.
While the above theories emphasize outside factors as significant public
policy determinants, a newer approach, the institutional-political process
perspective, suggests that the state is the center of change and influences the
outside pressures (Weir, Orloff, Skocpol 1988). This theory moves away from
defining one interest group or outside pressure (party demands, labor groups or
interest blocs, et cetera) as means for change; instead, it is the state that is the
major factor responsible for public policy development. Weir, Orloff, Skocpol
(1988, 17) suggest the following:
This approach examines state formation and the states institutional
structure in both societal and historical context. Political struggles
and policy outcomes are presumed to be jointly conditioned by the
institutional arrangements of the state and by class and other social
relationships, but never once and for all. For states and social
structures are themselves transformed over time. And so are the
goals and capacities of political and social structures, and in part
because of the effects of earlier state policies on subsequent political
struggles and debates.
Emphasizing the state at center stage in the institutional-political process
perspective, requires that the researcher pay special attention to the following
things: First, the historical particularities of state formation and their institutional
16

structures; second, the intersections of which class and other social relation with
the organization of the state and political parties; and, finally, the feedback effects
of policies on subsequent politics (Weir, Orloff, Skocpol 1988). The institutional-
political process wraps aspects of all the theoretical frameworks into one
perspective that emphasizes that the state sets the framework within which external
pressures operate.
The field of comparative studies has been evolving. The trend of research
has moved away from the search for single factors, it is now acceptable to
integrate diverse perspectives to help explain policy developments. Researchers
must use a wide range of comparative analysis when developing theories about
states. Peter Evans et al. (1985, 347) agree that, "To overcome deeply rooted
assumptions about the absolute causal primacy of socioeconomic processes and -
in measured, appropriate fashion to bring the state back in to our studies of
social change and politics require continuing theoretical innovation and
comparative-historical research, each closely coordinated with the other.
It is important to grasp many concepts when hypothesizing about a state.
Issues like structure, history, and activities of states are extremely important when
developing any "state or social theory.
In what is being referred to as the political process approach, Theda
17

Skocpol (1992) in Protecting Soldiers and Mothers, demonstrates how all aspects
of the theories discussed above actually work together in the evolution of public
policy. The state is at the center responding according to its systems and
structures, to external forces circulating around it.
This framework draws our attention to four kinds of processes: (1)
the establishment and transformation of state and party organizations
through which politicians pursue policy initiatives; (2) the effects of
political institutions and procedures on the identities, goals and
capacities of social groups that become involved in the politics of
social policymaking; (3) the "fit" -or lack thereof- between the
goals and capacities of various politically active groups and the
historically changing points of access and leverage allowed by a
nations political institutions; and (4) the ways in which previously
established social policies affect subsequent politics (Skocpol 1992,
41).
Each factor is influential, no matter if it is party politics, labor versus business,
strong faction blocs, or any other. All the factors influence the state and the state
influences the factors. "We must make social policies the starting points as well
as the end points of analysis: As politics creates policies, policies also remake
politics" (Skocpol 1992, 58). Skocpols theory suggests that policies create
feedback through changes in administrative arrangements and political power,
therefore, the cycle of influence and change starts over again. The following
diagram created by Theda Skocpol (1992) sums up how social policies feed back
into the various processes.
18

Transformed state capacities
Policies
(Time 1)
Changes in social groups
and their political goals
and capabilities
Policies
(Time 2)
The political process approach incorporates the methods and insight of all
the previous theories. Incorporated into this perspective are both a statistical and
a comparative historical method of analysis. Of all the theories, this one is the
most thorough attempt at predicting the causes and factors of public policy
development. However, this approach is so vast in theory that researcher may
find it almost unworkable. The time requirement to implement the ideas of
Skocpol will certainly dissuade many researchers from attempting to use this
analysis.
19

CHAPTER 3
THE BRITISH CASE
Great Britain developed a National Health Service (NHS) in 1946 and it
went into operation in 1948. This comprehensive program provides medical care
opportunities for all citizens and visitors. The national health program became
possible because of many factors in British history, from the fall of feudalism to
the empowerment of the Labour party. Other factors include the changes in
ideology, historical events and the shifting of power. In the 1940s, Great
Britains social and political framework had changed from what was once a very
individualistic, non-welfare state to one supporting comprehensive social
programs. What was the source of this change?
History of NHS2
The fourteenth century brought the Black Death and the death of
feudalism. This time holds significance because it marks the infancy of the era of
individualism and self-help, which subsequently led to the development of social
welfare programs. In feudal society, poverty was not a social problem.
This historical discussion depends on the following sources: Maurice Bruce (1966),
Victor George (1973), Bruno Stein (1976), W.J. Mommsen (1981), Sydney Checkland (1983),
Marina Burch and Bruce Wood (1983) and Michael Hill (1993).
20

Individuals were either bom wealthy or poor, and they were destined to remain in
that status for the remainder of their life.
The shift away from feudalism brought many changes. According to
Victor George (1973, 5), "Mobility of the population became possible, wages
came to be the accepted method of contract between employer and worker and the
freedom of the individual in theory, if not in practice, replaced the servility of the
serf to his lord." Many economic and social changes became evident after the fall
of feudalism and very gradually the social attitudes about helping the poor began
to change. At this time the nobility began to feel less responsible for their serfs
and government did not assume the responsibility. Out of moral responsibility,
the church took on the role of welfare provider. "Monasteries, churches,
hospitals and other institutions run by the Church became the national network for
relieving poverty" (George 1973, 4).
It was not until large numbers of poor citizens flooded into the cities in
search of relief that the government began to take an interest. The government
was not concerned with creating employment or relieving the poor; instead, the
focus was on preserving the established social order. Repressive legislation was
enacted in the fifteenth century to make begging and vagrancy a punishable
offence.
21

Much of the legislation of this period was aimed at vagrancy and
the disorders accompanying it tending to assume that poverty and
vagrancy were synonymous. The notion persisted that hungry men
were invincibly idle men, that poverty was a consequence of moral
fault (Jordan 1959, 80).
It was during this era that poverty became equated with laziness and the
unemployed were branded vagabonds and drifters.
By the early sixteenth century the number of unemployed poor was rising.
The church and other charitable organizations were overburdened and quickly
becoming impoverished. Poor citizens had little relief. Various acts were created
calling for support of the poor from the wealthy members of the parish. These
acts, commonly referred to as the Poor Law, were later incorporated into the
Elizabethan Act of 1601 which after many amendments and modifications
remained in effect until 1946.
The Poor Law was established in 1598 and enacted under Elizabeth I in
1601. "The Poor Law provided for relief for the elderly and those unable to work
by empowering local parishes to collect taxes and to appoint overseers of the
poor" (Goodman 1980, 5). The late sixteenth century was a time of industrial
expansion, which saw the emergence of the middle class. This was a time of
prosperity and abundant work. Unfortunately for the poor and unemployed, old
stereotypes that idle men were lazy flourished. "It was felt that there was work
22

for all that genuinely wanted it and that if people were poor it was because they
were lazy either through some inborn characteristic or through custom and habit"
(George 1973, 6). Poverty was not a social problem, it was a stigmatized
personal problem of the individual.
The doctrine of individualism grew out of this era. This was a time when
the individual was free to be the master of his own fate. Prosperity was available
to all who were willing to work for it. This was also a time when laissez-faire
was a predominant attitude and the belief that government intervention would
undermine individualism flourished. Poor relief remained limited and socially
rejected. In 1834, the "means test" was developed to determine whether an
applicant for public aid was eligible. This modification mandated that the family
had legal liability for the care of the poor person. If the family was unable to
support the relief applicant, then the responsibility fell on the local community.
The state maintained a principle of "less eligibility" which dictated that the
standard of relief for the Poor Law would keep the applicant poorer than the
poorest independent worker. "Poorhouses" were constructed for those unable to
work (elderly, sick, widowed, and orphans) and "workhouses" for those able to
work, but unemployed. Citizens who were able, but unwilling to work were
boarded in "houses of correction". Strict rules and regulations were enforced in
23

these facilities. "Silence was maintained at all meals, families were separated, and
alcohol, tobacco and visitors were forbidden "(Goodman 1980, 6). The
workhouse was made intentionally harsh to deter people from it. The thinking
was that individuals would try to help themselves instead of running to the state
for aid.
In 1834 the Poor Law Act was enacted. This was the first time the central
government intervened to direct and to supervise local government in the
administration of welfare programs. This was also a time when the central
government justified the harshness of the system. With this act, the ruling class
values about the poor and unemployed became national values. The ruling class
believed that the only real solution to the poverty problem was the workhouse
program. The punitive system of poor relief became the law of the land. Gilbert
stated, "The Poor Law...treated an applicant for relief as a quasi-criminal and
sought to force him by the pressure of humiliation and discipline back into the
labour market" (Gilbert 1970, 51).
This system was designed to discourage abuse. While it was harsh, it
provided food and shelter for millions of poverty stricken individuals. Public
relief houses provided some medical care for the poor; by the end of the
eighteenth century most parishes provided some medical services for the poor in
24

their homes. Eventually, as a result of epidemics, "Sick Asylum Districts" were
developed to prevent the spread of disease. These so-called poor law hospitals
were expected to treat the workhouse sick, but soon grew to treat anyone needing
treatment. "This was particularly successful in London, where isolation hospitals
for infectious cases, infirmaries for the non-infectious, asylums for the mentally-
ill, and dispensaries for out-patients were established (Goodman 1980, 6).
By the second half of the nineteenth century the spread of socialist ideas
and the empowerment of the working class began the cycle of reform. A critical
change was that the working class was granted the right to vote in 1867-85
(George 1973). What was once a silent and powerless group in society soon
became a threat to the ruling class. Citizens who endured the harsh humiliation of
the Poor Laws finally had a voice. Political leaders could no longer ignore the
demands of the working class because they had the power to vote the leaders out
of office. The politicians had to attempt to solve the problem of poverty. It was
during this time that the Labour Party formed and sent a loud message of working
class solidarity to the ruling class.
Britain became increasingly dependent on skilled labor in the late
nineteenth century. Industrialists realized that profitable businesses depended on
the workforce; therefore, workers needed protection from lifes misfortunes.
25

"Protection of the worker from want and worry thus became an economically
rational (profit-oriented) activity" (Rimlinger 1971, 337). Suddenly poverty
became a social problem because it directly and indirectly affected the workforce.
Poverty prevented some citizens from entering the skilled labor force, while others
had to miss work to care for elderly or sick family members. Victor George
(1973, 15) suggested that, "Poverty was not simply a problem for the individuals
affected but for society-it was not an individual but a social problem".
"Friendly societies" developed to provide relief for working class poor who
did not want to accept relief in the poor house. These societies which developed
in the workforce were mutual aid groups and usually helped individuals in the
same occupation. Trade groups would pool their money buy a doctor for the
group. "These organizations, which were the forerunners of modem insurance
companies, provided sick pay, medical care, and a death benefit to their members
in return for weekly contributions (Goodman 1980, 7). The weekly
contributions would go to a fixed salary of a doctor who was designated to
provide care for society members. "Medical clubs" also developed for those
individuals who could afford to pay their own medical expenses. Competition
from clubs and friendly societies kept capitation fees and membership dues
relatively low. This form of private insurance quickly grew in popularity.
26

The Public Health Act of 1848 created a central organizing body called the
General Board of Health. This board regulated the control of environmental
hazards to health. Eventually, effective public health institutions were established
through the Public Health Act of 1875. "Medical officers", most of whom were
general practitioners (GPs), made reports of infectious diseases, vaccinations, care
of children, births, deaths, and workman compensation claims to the central
authority. Many of the medical officers also worked under contract for friendly
societies and trade unions, therefore, conflicts of interest existed. As a result,
many general practitioners called for a change in the laws and supported a state-
based health insurance plan.
The Old Age Pension Act of 1908 was the first social security act passed.
This program provided five shillings a week for old people over seventy years old
(George 1973). This program was conditional. An income test was created which
controlled the payment of benefits. If individuals had too much income, they
were not eligible for the program, but those below the minimum income received
the full pension. This program was also qualified by some moral clauses. If
citizens had not been morally correct, no matter what their income, they would
not qualify for the pension. Moral correctness was defined as someone who had
worked regularly, was never convicted of drunkenness and fulfilled the general
27

moral qualifications (George 1973, 17). Unfortunately, this program cast
recipients in a negative light; therefore it was a stigma to accept this aid.
Another important piece of legislation was the Health Insurance Act of
1911. The focus of this act was to provide primary health care for most employed
manual workers:
This Act required people at work to pay contributions which entitled
them to a benefit when they were out of work because of illness or
unemployment. Employers and the State contributed to the fund
which financed the benefits. The Act covered most manual workers
in case of illness but only a small section of the unemployed
(George 1973, 17).
Individuals who did not contribute enough to this program were excluded from its
benefits. Employees paid a fiat rate and received fiat rate benefits. To qualify,
the recipient had to earn an income. This program was administered by approved
societies which were non-profit groups that grew out of the friendly societies.
Primary care was an important focus of this program. Eventually, it was
suggested that "Primary Health Centers" could be created to serve the general
populace, however, the idea of centralized care was not implemented at that time.
The numbers of patients increased and doctors complained that the quality
of care was dropping and their salaries were to low. "By 1947 some 23 million
people over half the population in Britain over the age of 14 were covered by
28

national health insurance for medical benefits (Goodman 1980, 10). Between
1913 and 1945 the number of patient visits per year increased by 50 percent.
Doctors received the same fee regardless of the service provided, therefore, they
had an incentive to provide least service possible. The patients (because the
service was "free") began to demand more attention from their doctors. Abuse of
the National Insurance Act became common.
"Approved societies" assigned doctors to designated groups of citizens,
called panel lists. The approved societies were soon manipulated by doctors to get
the "good risk" groups. Many doctors began to tailor their practice to have many
patients, but as little work as possible. The more patients a doctor had on his
panel list, the more salary he would receive through weekly premiums.
Ultimately, the abuses resulted in a reorganization of the insurance program.
Insurance was a vast improvement over the poor law programs. By the 1930s, a
plan to combine the Poor Law and the National Insurance Act was on its way to
Parliament. The resulting argument was that health care should be available to
everyone. As a matter of "right" all citizens were to be given basic medical care.
Although a new insurance scheme introduced in 1925 extended insurance to
widow benefits and old age pensions, and the national insurance program was
29

expanded to include most of the working-class population, the depression of the
1930s showed the weaknesses in the system. The masses of unemployed workers
were eligible for unemployment benefits for only six months, time enough to find
a new job. This program was not adequate, since employment was not available.
The central government was forced to respond to the suffering population. In
1934, the government created the Unemployment Assistance Board which became
the national body responsible for assistance of the poor and unemployed.
During this period the Labour party gained significant momentum and
power. A Labour government first emerged in 1924, and then again held power
from 1929 to 1931. This party advocated a reformed capitalist system which
included regular wages, full employment and extensive social services (George
1973). This government quickly discovered that the ruling class was a significant
force that would not easily accept fundamental reform. The Labour government
fell during the difficult years of the 1930s, but not without establishing new ideas
that had public support.
The Second World War added significant steam to the social reform
movement. The profound and demanding struggles of this war forced citizens to
rely on their community to survive. The very nature of war in its destructive and
unforgiving process showed the people of Britain how low humanity could fall. It
30

instilled in these people a desire to have a safety net and some kind of social
security. Plans for the reorganization of the social insurance programs began
during the war years.
In 1942 the Beveridge Report was published. This report detailed the
plans for social security and was eventually implemented by the Labour party.
The report, based on six principles, fostered Britains comprehensive social
security plan. The first principle was a notion of universality which meant that
every adult should be insured against the loss of income. The loss of income
could result from old age, illness, death, maternity, or unemployment and the
citizen would be insured. Second, the benefits would be paid out of funds
collected from contribution of the employer, employee and the state. The third
principle was that fiat rate contributions would result in flat rate benefits. All
people would pay the same amount and receive the same amount of benefits no
matter what their earnings were. This would be a more equitable distribution of
the financial burden. Fourth, the benefits would equal subsistence. For services
beyond subsistence, individuals could have private insurance. The national
minimum was the fifth principle. This principle was designed to catch those
individuals who did not qualify for insurance. It was the safety net designed to
protect those in need. The final principle was for administrative uniformity. The
31

plan was to be run by a new ministry with regional and local offices. This
ministry would take over the responsibilities of the approved societies and run the
entire program.
Much of this program was an expansion of the 1911 National Insurance
program, while it also incorporated some of the ideas of the poor laws. It was
designed to compromise between the Labor party which wanted extensive socialist
programs and the Conservative party which wanted to preserve the capitalist status
quo. The Liberals got welfare programs that protected all citizens. The
Conservatives were satisfied because this program allowed private insurance
companies to flourish because the plan only insured at a subsistence and basic
health level. A planning commission formed to research funding issues and
citizen reactions. Initially, it was thought that the working class would not
tolerate increased taxes to improve services; nor would the middle class be
interested in participating in a national medical care scheme. What the
commission found was an overwhelming willingness among the middle class to
participate in the plan. The general feeling of the middle class was that they had
been paying for the same medical service which the lower class received free.
Private pay was quickly out voted in favor of panel pay (national health service).
The commissions "White Paper Report" recommended that Parliament adopt the
32

National Health Service plan. Medical services were to be provided to all citizens
free of charge.
Although private practice was still permitted, doctors became salaried
employees of the state. Hospitals were nationalized and placed under government
control. A minority of doctors (37%) were opposed to the National Health
Service Act (Goodman 1980, 14). The doctors that opposed the act were not
against the notion of "free" medical services, their objections were based on
specific issues within the proposal and mainly concerned with preserving economic
and clinical freedom. Excessive governmental control was the major issue.
The British Medical Association (BMA) presented several proposals to
preserve their professional freedom and integrity. The BMA negotiated to drop
the plan of having doctors as salaried state employees and instead doctors would
be independent contractors. Private practice would be available to for paying
patient and "pay beds" available in state owned hospitals. Health service
providers would be provided a list of patients to serve and a fixed fee was
established for the doctors. Although many doctors began to disapprove of the
NHS scheme, the BMA reluctantly recommended it be accepted. "Although over
half of the general practitioners had voted to boycott the scheme, the new National
Health Service (NHS) went into operation on the "appointed day," July 5, 1948.
33

The program was implemented by the Labour government of 1945-50, but the
Conservative opponents did not fight the principles.
The NHS had a tripartite organizational structure which was based on
traditional patterns of care. The goal of the NHS was to provide primary medical
care for all citizens, regardless of ability to pay. The Minister of Health
coordinated the three segments of the organization. The structure was designed as
follows: 1) Hospital service provided on a contractual basis, 2) Local preventive
and support services organized by the local Health Department, and 3) Specialist
care which included some general medical, vision, and dental. The structural
organizational of the NHS proved functional, however, some system shortfalls
demanded change.
Uneven distribution of services and high demand of resources in short
supply were some of the factors influencing the change in NHS. Hospital services
became the predominant source of care which caused the demand for medical
service by the general practitioner to shrink. The tripartite organization was not
connected at the local level and did not permit much community participation.
Unhappy citizens and general practitioners became frustrated and called for a
reorganization of the NHS.
On July 5, 1973 (25 years after NHS was originally enacted) the NHS
34

Reorganization Act was passed. The goals of reorganization were to provide
mechanisms for community and local government participation, to redraw the
administrative boundaries and to unify the original three branches. A five level
organization was created with systems for checks and balances to insure more
equal distribution of resources, access to care, and a vehicle for community input.
The Parliament and the Secretary of the State of Social Service are the
head of the reorganized structure. The main objective of this group is to respond
to the legal questions of the NHS structure and function. The Department of
Health with its junior ministers and civil servants reports to the Parliament on
NHS objectives. This Department is the planning and administration body of the
NHS. Below the Department of Health are fourteen Regional Health Authorities
(RHA). These groups oversee the various regions and are the administration
authority for the distribution of health services. Ninety Area Health Authorities
(AHA) descend from the RHAs. Each AHA are responsible for day to day
planning and organization of health care which includes: providing comprehensive
health services, study of health needs in area, working with local authority to
provide social services, determining if services meet required standards,
promoting health education and setting up Family Practice Committees. The
general practitioners are accountable to the AHA. Finally, there are three districts
35

per area at which community health service is provided. These districts are run
by district management teams which coordinate clinics for expectant and nursing
mothers, general hospitals, child and school health exams, immunization and
vaccination, and family planning. Within each district are community health
councils (CHCs) that provide local consumers the vehicle of participation in the
NHS. The CHCs are the representative of the citizens.
Funding and Availability of NHS
The National Health Service is funded through general taxation. An 80
percent progressive general tax which increases with increasing income and a 10
percent fixed rate social security payment are the main contributions (Hill 1993).
Direct payment for certain services (dental care, prescriptions, etc.) amount to less
than 5 percent of the fund. This funding mechanism causes competition for tax
funds among the many social security organizations. Quality of care is lowered
because of the political struggles for priorities. The distribution of the NHS budget
favors the hospital sector dramatically; 65 percent of the budget goes to the
hospital sector, while less than 8 percent goes to the general practitioner (Bruce
1966).
Pros and Cons of NHS
36

The goal to increase access to medical service regardless of the patients
ability to pay has been one of the NHSs many successes. Now all citizens, not
just income earning members of the working class, have access to health care.
This high quality, technical care is provided at less cost than most other industrial
countries medical care programs. Nationalizing the health care in Great Britain
removed it from the profit arena. Today, adequate health care in Great Britain is
a matter of right, not privilege.
Inequities in the distribution of resources continue to burden the system.
Although all residents are eligible for the services of the NHS, not all can access
the services at their time of need because of the saturated market. Most doctors,
in an effort to increase earnings, over schedule appointments and have waiting
lists for care. Many physicians are unhappy with the restrictions they encounter
financially. Consultants (specialists) frequently move to other countries that offer
better resources for research and higher salary opportunities.
One of the ironies of the British health care system is that the
system was originally proposed, and subsequently defended, on the
theory that health care should be made available as a matter of
"right" and not on the ability to pay. In fact, however, Parliament
has never granted individuals the "right" to any specific course of
treatment for any specific illness. And the abridgement of the
theoretical "right" to health care, as we shall see, is a daily routine
in Britain, especially in the hospital sector (Goodman 1980, 19).
Basic care is available; however, advanced procedures and research are
37

opportunities are limited. The lack of compensation prevents most doctors from
specializing in a specific field or from preforming extensive tests on their patients.
Great Britain developed a comprehensive National Health Service in
response to the call for reform. The late 1800s began an important social shift in
British ideology. Industrialism brought a population shift to the city centers.
Although there was prosperity for many in these times, many also experienced
poverty. The traditional systems of support in the community began to break
down in the early 1900s. The church and charitable organizations were
overburdened; therefore, the central government had to provide relief for
struggling citizens. The early relief programs were demoralizing and inadequate,
so private programs developed. Labor developed the earliest form of insurance to
protect the workers from the desperate times of unemployment and illness.
Gradually these programs began to flourish and were expanded to include the
workers family. The terrible years of the depression and the wars forced the
British community to work together and sent a undeniable signal that social reform
was necessary.
The shift in power to the Labour Party was significant in the development
of social reform. Finally, the workers and their families had a voice in
government. Also, it became widely recognized that poverty had a detrimental
38

effect on workers, which in turn had a bad effect on industry ability to make a
profit. The shift to social reform was as much an economic response as it was a
social demand. Britain developed a comprehensive health care program available
to all as a matter of right, in response to all these factors. The historical presence
of other social welfare programs served to ease the transition into the NHS. The
British were forced to rely on their community and their government during the
early 1900s; therefore, social reform was required.
39

CHAPTER 4
THE UNITED STATES ENACTMENT OF SOCIAL SECURITY
Why did the United States lag behind Great Britain in adopting a national
plan for the elderly? Many important historical factors steered the United States
away from social security programs. This chapter will detail some of these
factors, while speculating on how they affected the social reform. A description
of social security and its programs is included. The historical and current
discussion relies on the contributions from many scholars, especially: Arthur
Altmeyer (1966), Peter Strauss, Robert Wolf, Dana Shilling (1990), William
Thomas (1991), W. Andrew Achenbaum (1986), Jeffrey Dunn (1981), Theda
Skocpol (1992), Judy Allsop (1984), Peter Ferrara (1985), Jill Quadagno (1988)
and Robert Stevens (1970).
The United States lagged behind its European counterparts in the enactment
of social security legislation. The Social Security Act was ratified in 1935,
twenty-four years after Great Britain established its national health insurance.
Prior to 1935, some Americans had access to a system of national military
pensions or a network of poor laws that provided minimal protection. However,
most citizens were compelled to rely on support and care from their family or
40

their individual savings. Although the United States, a growing industrialized
nation, had the economic capacity to support a national pension program, it failed
to establish any at the beginning of the twentieth century when European nations
were beginning to institute national programs.
The federal Social Security Act is recognized as a significant shift in
political and public opinions. A major obstacle to social security was the
American individualistic attitude. Citizens enjoy prosperity and a growing
economy, they had little support for what they perceived as unnecessary
programs. Paul Douglas (1936, 4) asserted the following:
The belief in rugged individualism, first created by
the frontier but finding emotional support from the
upward surge of the stock market, was a powerful
force holding back all protective legislation while the
rise in real wages lulled the majority of the working
class into a condition of more or less acquiescent
satisfaction.
Some movements for social insurance did exist but they were weak and
repeatedly defeated. "In the thirty-five years before the Social Security Act was
passed, forty-seven bills providing for public pensions were introduced in
Congress" (Quadagno 1988, 22). These bills all died in committee, victims of
various political assaults.
Some states tried to enact state-run pension programs, but market pressures
41

prevented this from happening successfully. When states attempted to implement
the pension programs, they usually created tax programs or set conditions on
labor. The requirements of implementing a pension program had detrimental
effects on the states ability to compete in the national market. The national
market was based on an interstate commerce system; therefore, if the cost of
doing business was high in one state, the markets of other states were preferable.
Consequently, the states that attempted to enact pension programs had direct
competitive disadvantages. The progressive states were restrained from
pioneering new programs to help workers and citizens. As a whole, the country
followed the pace of the less progressive states because the cost of blazing a new
trail toward pooled protection was too economically dangerous.
The implementation of state programs was also restricted because of the
mobility of workers. States that developed pension programs quickly discovered
that maintaining records for the compensation of workers would be a difficult
task. Workers would move out of the state causing problems with future contact
and difficulties in the calculation of the contribution. The task of maintaining and
updating records was very costly for individual states. Also, many people would
move into the state causing an overload of unemployed workers and burdening
other state programs. For these reasons, the states and other organizations began
42

to push for a federal program.3
The American Association for Labor Legislation (AALL) created in 1906,
was a prominent organization favoring social reform and promoting public health
insurance. This organization, also known as the American Section of the
International Association for Labor Legislation, was founded by social scientists
and middle-class reformers interested in social change. This group was
responsible for legislative drafting and lobbying, but most especially for
encouraging the change of public policy and public opinion to be more in favor of
social insurance.
The AALL often clashed with business organizations, yet it was quite
successful at getting its progressive points across. In 1916 the AALL
recommended a compulsory, government-run health insurance program, rather
than a voluntary, private plan. Insurance industry advocates spoke out harshly
against the AALLs agenda, suggesting that their movement was socialistic, would
lead to governmental corruption and would inflate the cost of medical care. As is
the case in todays social insurance reform movement, the insurance industry had
3,Bj
and
optii
as o
of 1
the middle of 1934 there were, therefore, twenty-eight states and two territories (Hawaii
i daska) which had old age pension acts, of which twenty-three were mandatory and live
> lal. By this time there were approximately 180,000 aged persons receiving such pensions,
> npared with some 70,000 at the end of 1931 and 114,000 by the end of 1933. By the end
m, there were 231,000 aged persons on the pension rolls" (Douglas 1936, 6).
43

a huge advertising campaign against involuntary social insurance programs.
Many other organizations were opposed to the comprehensive involuntary
insurance plan promoted by the AALL. The Illinois Manufacturers' Association
(IMA) opposed all new governmental expenditures and regulation to help labor.
They believed that the AALL was socialistic and an attack on capitalism. Theda
Skoqjol (1992, 184) suggested that even progressive corporations and business
forces opposed AALLs position,
The AALL also clashed with reformist, "corporate-liberal" business
forces, including "progressive" employers in Massachusetts who
preferred voluntary to compulsory unemployment insurance, and the
National Civic Federation, which orchestrated representatives from
business and the national Federation of Labor into vocal criticism of
AALL proposals for public health insurance.
The AALLs broad plan met the criticism of many groups, however it did serve
an important purpose in fueling the fire for social reform.
Although the AALL was labor-oriented, it was unable to form alliances
with important trade unions. In fact, the American Federation of Labor (AFL)
spoke out against contributory social insurance measures and labor regulations
which were the AALLs main platforms. The AFL national leadership insisted
that voluntary union programs protected the workers. They insisted that social
insurance would subordinate the worker to the state, causing the worker to lose all
44

control of decisions. These leaders even rejected public unemployment insurance
as a treatment for the jobless.
The AFL insisted that the unions could work with existing governmental
policies to protect workers. One idea they suggested was a policy mandating an
eight-hour day. The AFL leaders felt that the eight-hour day policy would spread
work more widely, thus eliminating unemployment. Instead of social insurance,
the AFL wanted buildings to be erected to provide the unemployed with
nourishment and housing during the winter months. The AFL had dissent among
its members on the subject of social insurance. "By the time of the 1918 AFL
Convention, there was recognition that many state labor federations were
endorsing health insurance proposals" (Skocpol 1992, 209). Eventually, the AFL
called for federal noncontributory old-age pensions, but it never joined forces with
the A ALL.
Between 1915 and 1918 research on compulsory health insurance
flourished. The AALL Legislation created a model for hospital and physicians
services that was arranged similar to the workmens compensation plan.4 The
American Medical Association (AMA) created the Committee on Social Insurance
This was a contributory program between employer and employee, that insured the worker
in cases of on the job injury.
45

in 1916 to study the topic of health insurance. The AMA was interested in how
public health insurance might adversely affect the medical community; therefore,
they funded this early research. Social and economic factors would later
dramatically influence the call for state-supported health insurance.
In spite of the great strides that were being made toward social reform
across the country, the South completely resisted old age pensions and other forms
of social insurance. It became obvious that the resistance of the South and
Southwest was an attempt to exclude minority citizens from such programs.
Southern leaders argued that keeping track of wages and work records for
agricultural laborers and domestic servants would pose an insurmountable
problem. More basically, argued Jill Quadagno (1988, 115), "Southerners feared
that federal benefits would undermine planters paternalistic control over tenant
labor, particularly black labor. The indigenous populations and Mexican
Americans in the Southwest were also a basis for lawmakers resistance to social
insurance. These leaders did not want migratory and agricultural workers, which
were dominated by indigenous and Mexican American populations, to benefit from
the social programs because of a perception that the system would fail if they were
included. Paul Douglas (1936, 9) conveyed his concerns about the disparities of
implementation in the social programs,
46

It was probably no accident that the reluctance of the dominant race
to provide pensions for aged Negroes, Mexicans and Indians
accounted for a part at least of the slowness of the southern states,
and for the failure of Oklahoma and New Mexico to take action.
Race relations were a major stumbling block in the creation and implementation of
social insurance programs.
A major factor that reduced the resistance to social insurance reforms was the
terrible economic struggles this country encountered during the great depression.
Demands for public funded assistance and relief could not be ignored when
thousands of people became unemployed and homeless during this time of
economic destitution. Traditional systems of support (families, charities and local
government) were overburdened and unable to provide enough help. Citizens
looked to the federal government for help and social institutions urged reform.
This age of suffering gave birth to the call for economic and social insurance. In
response to the public outcry and political pressures, President Franklin Roosevelt
initiated the process of adopting a plan for social/economic insurance. Emergency
measures were required to ease the stress caused by the Great Depression.
President Roosevelt appointed the Committee on Economic Security to
address the issues of economic security and to formulate recommendations for
long range solutions (Douglas 1936). This committee was formed on June 8,
1934, and it set out to create a comprehensive system of social insurance. This
47

social insurance plan included protection for all major personal economic hazards.
The plan addressed unemployment compensation, contributory old age insurance,
public assistance for the support of dependent children and old age pensions. In
addition, there were recommendations to create federal grants for public health
programs, welfare programs and maternal and child health programs. These
recommendations for economic security (later called social security) were far
reaching and comprehensive.
The committee had significant concerns about funding and operational
issues. A primary concern was that the program might be defeated as
unconstitutional by the Supreme Court as had been eight New Deal laws between
January 1935 and May 1936. Although a cooperative federal-state program was
less likely to be determined unconstitutional, the committee recommended a
federal program. The committee determined that the program would be to
difficult to run state-to-state because of the mobility of workers. The funding
proposal was based on employee/employer contributions and required wage
credits; therefore, a uniform system was required. A federal program would
permit mobility of workers without the added risk of losing working credits for
leaving certain states and it insured uniformity.
Roosevelts plan was to have a contributory social insurance program, not
48

funded through general taxation (Schwartz 1970). Although, he acknowledged the
need to assist those individuals already retired or needy through general tax
revenues, he did not want the new program to be funded that way. President
Roosevelt envisioned a comprehensive social insurance policy available for every
child at birth, which would cover all major personal economic hazards, especially
unemployment and old age. Since this program was to be contributory, it would
be an earned right, not a free ride.
Other programs were suggested and presented to the legislature. The
Townsend Plan was introduced on June 8, 1934. This plan, called the "Townsend
Old Age Revolving Pension Plan", would entitle every person in the United States
over the age of 60 to receive $200.00 a month (Quadagno 1988). The only
requirement being that the recipient spend the $200.00 within 30 days. This plan
was to be funded by a two percent sales tax on all transactions. The drafters of
this plan purported that the funding source would also encourage employment and
development. This plan had an enthusiastic backing from citizens and political
leaders. The cost of the proposal was to redistribute about $24 billion of the $40
billion in national income to 9% of the population each year (Dunn 1981).
Louisianas Senator Huey Long and Wisconsins Robert La Follette
presented the "Share the Wealth Plan" (Altmeyer 1966). This plan which was
49

much less popular than the Townsend Plan simply suggested that everyone should
have a standard wealth. Those who had more wealth would share their wealth
with the less fortunate. His slogan was "Every Man is a King".
Several groups, including the American Medical Association, condemned
the notion of government-sponsored health insurance. Most of these groups were
antagonistic toward parts of the program, but not the entire plan. The Medical
Advisory Committee (composed of some AMA members) formed to review the
health insurance program. This Committee recommended the addition of the
public health program, the insurance for risks from ill health and the federal
grants-in-aid for all needy. The timing was right for the Social Security Act; yet
it lacked a health component to the plan as passed in 1935.
The strongest opposition to the proposed program was against the old age
insurance plan. Opponents feared the government would have access and control
of citizens money and abuse would result. The power of government was getting
too vast and verging on socialism, according to some observers. Although, the
old age insurance provision was a major stumbling block, it passed. The bill
passed the House in the final vote with 371 to 33 in favor. It passed the Senate
by of vote of 77 to 6. On August 14, 1935 President Franklin Roosevelt signed
50

the Social Security Act into law (Altmeyer 1966).5
This act established two social insurance programs: a federal-state system
of unemployment insurance and a federal system of old-age benefits for retired
workers. It also provided for federal matching grants-in-aid to states to assist
needy aged, blind persons and children. Commissioner for Social Security (1946
to 1953), Arthur Altmeyer said, "Because of the many millions of persons insured
and the billions of dollars paid out in benefits each year, it is unquestionably the
largest insurance organization in the world" (Altmeyer 1966, 6).
After it was signed into the law the opposition continued its movement
against the social security act. The Towsendites urged Congress to expand the
program, while Republicans argued to repeal Social Security. By May 1937, the
Supreme Court upheld the constitutionality of the unemployment insurance and the
old age insurance.6 The opposition was silenced with this Supreme Court ruling.
The federal-state programs were working; however, the old age insurance
1935.
See Appendix C Presidential Statement upon Signing the Social Security Act, August 14,
(Public Papers and Addresses of Franklin D. Roosevelt 1935, 324-325).
Â£1
opinn
Coni
payrp
on e
social
Helvering v. Davis. 310 U.S. at 640, 645 (1937). Judge Cardozo argued in the majority
on
that the constitutionality of Title n of the Social Security Act was valid because
ess "may spend in aid of the general welfare". Also he held that the employer-employee
1 taxes were valid because they represent an excise tax on employers and an income tax
njployees. This favorable Supreme Court decision caused the opposition to cease its anti-
security campaign.
51

program had some significant administrative problems. From the beginning, the
financial basis of the old age insurance program was challenged. Setting up the
system, especially the public assistance section, was a slow and difficult process.
The costs of inefficiency, misuse and politically motivated abuse compelled the
Social Security Administration to withdraw federal funds from some states and to
amend the Act.
On December 10, 1938, the Advisory Council issued its first report,
recommending a series of sweeping reforms to expand Social Security,
including: (1) the enactment of supplementary benefits for wives, widows,
and dependent children of retired workers; (2) an increase in the amount of
initial retirement benefits; (3) an advance in the initial benefit payments
from 1942 to 1940; and (4) an extension of coverage. The Advisory
Council also suggested partial general revenue funding to cover the higher
benefit recommendations (Dunn 1981, 31).
These recommendations for reform were enacted in 1939 and resulted in broad
changes in the philosophy of Social Security. Suddenly the act changed from a
individualized insurance program to a broad insurance and welfare program for
individual workers and their beneficiaries.
After Roosevelts death in 1945, attempts to reform Social Security
continued. The subsequent changes to Social Security were the product of
extensive bipartisan bickering and debate. President Truman attempted to expand
the plan into the health and disabilities areas. At this time the Democrats
preferred a comprehensive medical and disability program, but they were
52

countered by the Republicans demand for a need-based program. During this time
the post-war recovery was a major concern. The Republicans introduced
legislation to remove 500,000 employees from the system and to raise public
assistance funds to offset the diminished role of Social Security. In spite of
Trumans veto of this proposed legislation, the Republicans triumphantly
overruled the veto and the proposal became law in 1946 (Dunn 1981). In 1948
the voters elected a majority of Democrats into Congress which ignited the
possibility for expansion of Social Security.
Reforms in 1950 resulted in taking more people off welfare and giving
them access to the Social Security program. Coverage was extended to the self-
employed worker and other groups, overall the benefits increased by 77 percent.
Although these reforms were extensive, they did not include the disability and
health insurance initiatives. By 1954 bipartisan support for the expansion of
Social Security was growing. President Eisenhower called for the liberalization of
benefits and an increase in the taxable wage base. His administration endorsed
Social Security and sent a message to Congress that alternatives to the system
would not be a priority; instead the main issue was expanding and amending the
existing system. This bipartisan support was a significant turning point for Social
Security.
53

In 1956 Congress added the Disability Insurance program which provided
that disabled workers between 50 and 64 could receive benefits. The following
year this program was extended to include dependents and survivors of a disable
worker. Eventually, by 1960, the minimum age requirement was dropped and the
disability program was available to all covered workers. In the early 1960s the
expansion was direct at health and medical coverage which developed into the
Medicare program. Medicare was endorsed by both the Kennedy and Johnson
Administration, but was seriously countered by the Republican opposition.
The Republicans introduced a proposal for a voluntary medical insurance
plan that would cover hospital and doctor costs. This plan would be financed by
voluntary payments and government matching funds from general revenues.
Eventually, this proposal resulted in the combining of the Democrats Hospital
Insurance plan (HI) and the Republicans Supplementary Medical Insurance plan
(SMI). The HI plan called for an increase in the payroll tax and called for two
major objectives: 1) the protection against the cost of serious illness; and, 2) to
create a foundation for supplementary and private programs. President Kennedy
said in support of HI that, "Together with retirement, disability and survivors
insurance benefits, it will help eliminate privation and insecurity in this country"
(Stevens 1970, 682). Medicare, the combination of the HI and SMI proposals,
54

was signed into law in 1965 and promised that the elderly would be relieved of
the burden of medical expenses.
The Medicare debates over the right to substantial health care for the
elderly initiated a movement for adequate health care for the indigent citizens.
The Medicaid7 amendment would provide expansive health coverage for poor
citizens young and old. The indigent elderly citizens would benefit by having
expenses for skilled nursing home and physician services covered. The overall
belief that adequate health care was a matter of right propelled this amendment
into law and removed more people from the ranks of the welfare system.
President Johnson stated at the signing of this bill,
Franklin Roosevelts vision of social insurance has stood the test of the
changing times. I wish I could say the same for our Nations welfare
system. The welfare system today pleases no one. It is criticized by
liberal and conservatives, by the poor and the wealthy, by social workers
and politicians, by whites and by Negroes in every area of the Nation
(Stevens 1970).
By 1970 the Black Lung Program was developed to assist coal miners who
suffered from Black Lung Disease. Cost-of-living increases were ratified by
statej
In C0
Title
Medicaid is a medical assistance program for the needy jointly operated and funded by
And federal governments. It is available only to individuals with limited income and assets,
a itrast, the Medicare program is not need-based, it is available to all citizens 65 or older.
SIX of the Social Security Act established the Medicaid program. The provisions of the
progrim can be found at 42 U.S.C. Sec. 1396(a)-(q).
55

Congress in 1974 and by 1983 an amendment permitted up to one-half of benefits
to be taxed for certain upper-income beneficiaries. The amendments were
significant and broadened the original act tremendously; however, the original
designed remained intact (Strauss, Wolf and Shilling 1990).
Social Security Provisions
Deductions from workers paychecks are matched by employers and
contributed to the Social Security fund. The percent of the deduction has
increased steadily since it was originally assigned. "There have also been twenty
increases in FICA rates since 1950; the tax rate has gone from 1 % of the first
$3,000 of income in 1937 to 7.51% of income up to $45,000 (payable by both
employers and employees) in 1988" (Strauss, Wolf and Shilling 1990, 142). In
1966 dramatic increases occurred to pay for Medicare. Cost-of-living-
Adjustments (COLA) also increased. "COLAs can be burdensome on the Social
Security system and on the economy as a whole; the COLA announced in June
1979 was 9.9%, with the peak reached the next year at 14.3%, and a still
substantial 11.2% in 1981" (Strauss, Wolf and Shilling 1990, 142).
The deductions from employees and employers function as the trust fund
that financially supports citizens over 65 years of age. Retirement benefits are
56

received by individuals (and their eligible dependents) who have earned work
credits for eligibility. Work credits equal one credit per each $540.00 in earnings
with a cap of four credits maximum per year. Forty credits (10 years of work) is
the usual total to qualify for benefits. The amount of benefit is determined by the
income during the individuals working life. A program called Supplemental
Social Security (SSI) assists elderly who are not eligible through work credits; it is
funded by the general revenues of the federal government (Social Security
Pamphlet 1991, 10).
The age retirement benefits can be received and the amount of benefits
depends on each individual. An individual who works steadily throughout life and
earns the maximum number of working credits will receive higher benefits than
those who lack work credits. The "full retirement age" is 65; however, early
retirement opportunities are available. The earliest retirement age is 62 years.
Since it is assumed that individuals who choose to retire early will be receiving
benefits for a longer period of years, the retirement benefit is lowered.
Additionally, changes have been made in the retirement age in response to the
growing life expectancy. As the life expectancy has increased over the last
century, it has become necessary to change the retirement age. In response to the
demographics, the Social Security administration raised the full retirement age for
57

those reaching 65 in the year 2000 and after, as shown in Table 4.1. Early
retirement will be available; however, larger reductions in benefits will occur to
those who retire early.
Table 4.1- Age To Receive Full Social Security Benefits
Year of Birth Full Retirement Age
1937 or earlier
1938
1939
1940
1941
1942
1943 - 1954
1955
1956
1957
1958
1959
65
65 and 2 months
65 and 4 months
65 and 6 months
65 and 8 months
65 and 10 months
66
66 and 2 months
66 and 4 months
66 and 6 months
66 and 8 months
66 and 10 months
1960 and later 67
Source: SSA Pamphlet Retirement 1991, 6.
By extending the retirement age, higher working credits can be earned,
which will result in higher benefit payments. Also, as an incentive to keep older
Americans active and working, the government offers an increased percentage of
benefits for those who work beyond full retirement. The increase accumulates
58

from the full retirement age until the applicant reaches age 70. Table 4.2 explains
the annual percent increase depending on year of birth.
Table 4.2 Chart Of Increases For Delayed Retirement
Year of Birth Yearly Percentage Increase
1916 or earlier 1%
1917 1924 3%
1925 1926 3.5%
1927 1928 4%
1929 1930 4.5%
1931 1932 5%
1933 1934 5.5%
1935 1936 6%
1937 1938 6.5%
1939 1940 7%
1941 1942 7.5%
1943 or later 8%
Source: SSA Pamphlet-Retirement 1991, 9.
Full Social Security benefits are received by individuals who are "retired".
Individuals who continue working and whose earnings are below the limit enjoy
full retirement benefits. The definition of retirement depends on the monthly
income, not annual salary or hours worked. A person is considered retired if
their monthly earnings are below $590 for people under 65 or below $810 for
people 65 to 69 (SSA Pamphlet Retirement 1991). Self employment income is
59

calculated as a part of the monthly salary.
To receive benefits, a person must apply for Social Security. The
application process can begin up to three months before the individual wants
benefits to start. The process can be initiated in person at a Social Security office
or by phone. Production of numerous documents is required throughout the
application process. Some of the required items include: Social Security number,
Birth Certificate, W-2 forms or self employment tax return for last year, spousal
information, and checldng/savings account information if direct deposit is desired.
A divorced spouse can get benefits from their former spouses Social
Security record. If the marriage lasted 10 years or more, and the applicant is 62
years or older and unmarried, then they can apply for their ex-spouses benefits.
If the ex-spouse is still working, they must be at least 62 years old for the
applicant to receive benefits. If the divorce occurred two years before application,
then the applicant can get benefits even if the spouse is still working. Benefits
received by the divorced spouse do not affect the amount of benefits received by
the current spouse.
Medicare/Medicaid
The 1965/1966 Social Security amendments provided additional relief to
retired and elderly citizens. The amendments, known as Public Law 89-97, were
60

far-reaching and comprehensive. This social legislation created two new major
provisions: one being Medicare and the other Medicaid. Medicarea public
health insurance program based on Social Security-dramatically benefits its
recipients. Medicare has become a primary form of support for cost of elderly
health care. The federal/state program called Medicaid (Title XIX of the Social
Security Act) was established in 1966 to assist certain groups of low income
Americans with medical needs.
Unlike Medicare, which is available regardless of financial need to
any person 65 or older and to certain disabled individuals, Medicaid
is available only to individuals with limited income and assets. In
1986, 22.4 million people received Medicaid benefits, of whom 3.4
million were older persons (Brown 1989, 256).
The passage of these laws was based on the notion that health care is a matter of
right (Plesser, Siegel and Jacobs 1986, 29).
Medicaid and Medicare significantly impact the federal budget; health care
cost continue to rise as does the population of beneficiaries. "Federal spending
for Medicare has increased from $7 billion in 1970 to $71.4 billion in 1985 and
has still not kept pace with the rising cost of health care" (Plesser, Siegel and
Jacobs 1986, 28). These numbers are especially dramatic when coupled with the
fact that many elderly citizens pay their own health care cost through private
insurance and personal savings. The question of the federal governments ability
61

to continue supporting these programs is significant.
Despite annual expenditures of nearly $70 billion, Medicare has failed to
provide adequate health care insurance to its 30 million subscribers. Prior
to Medicare, the elderly spent a lower percentage of their income on health
care needs than do todays Medicare beneficiaries (Brown 1989, 219).
Combining the population explosion among elderly citizens with the huge outlays
of funding through Social Security the potential crisis becomes apparent.
Medicare and Medicaid are operated on a shared costs basis, with Medicaid
paying between 50 and 78 percent of the Medicare bill in each state (Brown
1989). "At present [1989], the total cost of the Medicaid program is $40.0 billion
annually, with the federal government paying about $22.5 billion" (Brown 1989,
256).
Unlike Medicare, Medicaid is a welfare program that provides health care
benefits based on medical and financial need, not accumulated working credits.
These programs are administered on the state level by the Department of Social
Services. On the federal level, the programs are administered by the Health Care
Financing Administration (HCFA), a department of the U.S. Department of
Health and Human Services (HHS). HCFA has demonstrated its desire to limit
Medicare coverage and to shift more costs to patients and third parties such as
Medicaid. The actions of the HCFA is a disturbing threat to the Medicare system
(Brown 1989). Problems with the dual federal and state system of Medicaid have
62

caused huge differences in the eligibility requirements and benefits available in
each state.
An applicant to Medicaid must qualify for eligibility by meeting three
eligibility requirements: categorical, income and resource. To qualify for
Medicaid relief for long term care the following requirements must be satisfied8.
Categorical requirements cause the applicant to be institutionalized for a minimum
period of thirty days with medical needs necessitating the institutionalization. The
individuals income requirements cannot exceed $1,221.00 per month (1991
figure, adjusted annually). Finally, the "countable resources of the applicant
cannot exceed $2,000.00 (Ridgway, 1991). People who cannot afford the
expenses of adequate health care, yet do not qualify for Medicaid, fall into a
growing group called the "Utah Gap". These seniors need resources and care, but
they are forced to wait until their finances are depleted enough for them to qualify
for aid.
Resources fall into two groups: exempt and non-exempt. Exempt
resources are not countable and do not go into the $2,000.00 total. The home and
its contiguous property are exempt because it is assumed the individual would
These are Colorado requirements from 1991. States vary on the specific requirements
of Medicaid, but generally they all follow the general categorical tests.
63

want to return home. Whether or not an individual is medically capable of
returning home does not change the exempt status. The Medicaid recipient or a
relative/friend must simply voice the desire of the individual to return home. Also
exempt is one motor vehicle (regardless of its value) if it is used for medical
treatment, transporting the handicapped individual, or used for employment. The
car can simply qualify as exempt if it is used to transport the medicaid recipient to
and from the doctors office. If one of these requirements are not met, then a
vehicle of a value up to $4,500.00 is exempt. Excess value is counted toward the
countable ($2,000.00) resource limit.
Personal property with a value less than $2,000.00 is exempt. This exempt
list also includes: Irrevocable funeral and burial plans, wedding and engagement
rings, medical equipment, life insurance with a face value of $1,500.00 or less.
Non-exempt items include everything else of value. Non-exempt resources
include: cash, certificates of deposit, money market accounts, stocks, bonds, life
insurance with a face value in excess of $1,500.00, second homes, second cars, et
cetera.
To qualify for Medicaid, individuals often transfer their assets to meet the
eligibility requirements. Resources can be given away or sold; however, a penalty
is assessed. If property is transferred within thirty (30) months prior to the
64

application for Medicaid, it is assumed that the transfer was made to qualify for
Medicaid. The burden is on the applicant to prove the property was not
transferred (at less than market value) for the purpose of qualifying for Medicaid.
Eligibility penalties are assessed against individuals who transfer property without
fair consideration or compensation. The penalty of non-eligibility is assessed
against the applicant. Depending on the value of the property transferred,
eligibility is denied for a certain number of months. Exceptions to this rule do
exist in the case of "undue hardship" and special property transfers.
In the process of qualifying for Medicaid, virtually all the income and
resources are depleted. In the case of long term care (nursing home qualification)
when a married couple is separated, the spouse that remains home ("community
spouse") can be left impoverished and unable to afford the home expenses. To
qualify for Medicaid, a couple is forced to deplete their income and resources,
which exhausts the assets available for the community spouse. This unfortunate
circumstance is known as "spousal impoverishment". It is very common that the
community spouse will risk impoverishment in order to obtain adequate care for
their "institutionalized spouse". Spousal protection programs have been developed
to help guard against spousal impoverishment.
The issue of spousal impoverishment has been addressed by law makers in
65

the last several years. The Medicare Catastrophic Coverage Act was signed into
law in 1988 (Thomas 1991). This Medicare Act (partially repealed in 1989)
addressed the issue of spousal impoverishment (a/k/a spousal protection). This
law has an income/resource provision that attempts to prevent adverse
repercussions from affecting the community spouse. As of September 30, 1989,
the community spouse is guaranteed a minimum monthly income ("Minimum
Monthly Maintenance Needs Allowance") which is adjusted annually. As of July
1, 1991, the community spouse minimum monthly needs allowance equals
$984.00 per month (Ridgway 1991). If the monthly income dips below this
figure, then money is retrieved from the institutionalized spouses income to bring
the community spouse back to the guaranteed level. If the community spouses
monthly needs (mortgage, rent, utilities) exceed the guaranteed level by 30% or
more ($295.00), or if circumstances exist that create severe financial distress for
the community spouse, the monthly allowance can be increased. The maximum
monthly allowance of $1,662.00 can be made available to the community spouse.
(Ridgway 1991)
The Medicare Catastrophic Coverage Act also attempted to address the
issue of resources. In this case, the shared non-exempt resources owned by the
couple are considered available to pay for the institutionalization costs. A portion
66

can be held exempt to protect some of the community spouses livelihood. This
portion is called the "Community Spouse Resource Allowance". The resource
allowance can be increased for special exceptions. A court order can demand that
a larger portion of the resources be preserved for the community spouse or if a
larger amount of resources are required to generate the income that is protected
under the income portion of the law.
While legislation has eased some of the spousal impoverishment burden,
however, late-life medical care (including long term care) is still a major concern
of the elderly. Whether through Social Security or private insurance, the personal
costs of medical care are astronomical. Additional factors contribute to the
worries of the older American. These factors increasingly include reduced
availability of nursing home beds, practitioners and nursing homes limiting the
number of Medicaid patients they accept, and declining quality of service due to
the growing numbers of the elderly.
The United States road to social reform began in the era of industrialism.
As the economy shifted from an agrarian to an industrial base, the population
shifted to urban areas in the search for work. This shift brought the problems of
poverty and unemployment to a new high and citizens looked to the government
for support. The depression accentuated the need for governmental intervention as
67

banks failed and unemployment surged. Various reform movements developed
which put pressure on the government to change. Roosevelt responded to the
social pressures of this time by introducing to Congress a plan to protect the
retired worker through a contributory income tax program. The Social Security
act became law, but was followed by numerous attempts to overrule or expand it.
The bipartisan fighting was significant in the passage of Social Security and its
subsequent amendments. Republicans and other opponents who wanted Social
Security limited or even repealed, eased their attack when the Act was held to be
Constitutional by the Supreme Court and fears of socialism did not pan out. The
Roosevelts plan stood the test of time and survived political battles.
The Kennedy attempted to expand the Social Security Act to include
medical coverage. President Kennedy believed that elderly and poor citizens
should have access to adequate health care. From these beginnings and on
through the Johnson Administration the debate of health care reform raged.
Opponents feared expansion of governmental intervention and increased taxes, but
compromised for a modified health program. The Medicare and Medicaid
Amendments were enacted due to the cooperation of both political parties.
68

CHAPTER 5
CONCLUSION
EFFECTS OF THE HEALTH CARE SYSTEMS ON THE ELDERLY IN
BRITAIN AND THE UNITED STATES
Access, costs and quality of care are three major points of concern.
Ideally, high quality health care maintained at low costs should be available and
easily accessed by all citizens; however, this is not currently possible in the
United States. The high quality of health care has very high costs associated to it.
Costs for research and development are enormous, resulting in decreasing access
to adequate health care. The United States has some of the most advanced
technology and medical procedures available in the industrialized world.
Additional factors drive the cost of health up. Malpractice insurance and
legal expenses have a significant influence on costs. The motivating factor of
profit increases specialties and technological advances; however, it also increases
the general costs of adequate health care. Doctors in the United States command
the highest salaries available in the world. Many doctors from the international
community migrate to the United States because of the available profits and
research opportunities.
Much of the technological research is devoted to long term illness and acute care
69

problems. A growing sentiment is that more money should be allocated toward
preventive care, which will hopefully result in the decrease of long term illness.
It is also suggested that more doctors should practice general medicine, thus
providing more individuals with basic health care. A common difference between
the general practitioner and the specialist is that the specialist will run more tests,
more often, and costs will be much higher. Specialist are trained to be thorough,
leaving little doubt in their diagnosis.
In comparison, Great Britain provides good quality health care for the
lowest cost of all the industrialized nations. Adequate health care is a matter of
"right" in Great Britain; although availability may not be immediate, care is free
to all citizens. Research and technology are much more limited in Great Britain
than in the United States. Funds are devoted to maintaining the available health
system and preventive care resources, rather than on developing new technology.
The National Health Service is not a profit-seeking business. Doctors are
predominantly general practitioners who less often refer their patients to
specialists. These practices are instrumental in keeping the costs and availability
of care down.
The goal of reform in the United States will be to decrease the cost of
care, hopefully without diminishing the quality of care. Once the costs are
70

lowered or at minimum stabilized, the access to health care will automatically
improve. Increasing government control is one way of attaining reform goals.
Plenty of opposition to government involvement exists. Most notably, doctors
resist cost controls and research grant reductions because it reduces profits.
The increasing number of citizens who do not have access to adequate care will
continue to nag at the system. Law makers will not be able to ignore the growing
"Utah Gap" in the senior citizen population. From its inception, the Social
Security Act has relied on the proposition that adequate health care is a matter of
right. Not only is adequate health care a matter of right, many believe its a
matter of national priority.
Citizens prolong suffering because they cannot afford health care. This
situation burdens the system and the community in many ways. First, ailing
individuals have a greatly increased chance of worse illness by not receiving
medical attention at the onset of the symptoms. Doctors recommend preventive
care; however, delays in visitations often completely removes this option. In the
United States (unlike Great Britain) long term and acute health care are common
due to the delay in preventative care.
Secondly, individuals who are ill, but do not have access to adequate health
care burden the system. These individuals generally tend to be depressed, less
71

productive and require help from other citizens. If adequate health care were
available, the suffering of individuals would not be prolonged unnecessarily.
Also, these people could return to their full productive capacity sooner.
Thirdly, access to adequate health care is of urgent importance because of its
impact on the economics and the general attitude of the community. Underserved
and ailing citizens burden the community emotionally. Unproductive attitudes
increase in an unhealthy community. Increased absentees and reduced
productivity are often noted when individuals have to work harder to cover for
someone who is sick. It is in the best interest of the community for everyone to
have access to health care. Increased access to health care permits preventive
medicine to work, thus decreasing the time length of illness and the costs
associated to it. In addition, society will be more productive and have generally
better attitudes.
With all the predictions of demographic shifts in age, it is apparent that
increased demands on the health care system will continue. Elderly people require
increased medical care and are more prone to acute illness. Many older
Americans do not have access to adequate health care because of the costs.
Reforming the health care system to increase availability of adequate care will
greatly improve the quality of life for the older American.
72

Adequate health care, whether long term care or preventive care, must be
available to seniors. Currently, many older Americans suffer unnecessarily
because they cannot afford health care. Suffering and loneliness are major causes
of increasing rates of depression among the elderly. Access to health care could
reduce the suffering and depression of many individuals.
Private insurance and social security do not provide all the elderly access
to care. The number of individuals who fall in the "Utah Gap" because they do
not have enough money or insurance to receive adequate health care and too much
money to qualify for Medicaid has been increasing. Past generations relied on
their families and the community for security and care in late life. Today the
family unit is dispersed and often incapable of providing care. Older American
are compelled to rely on the community and public support for care.
The National Health Service was established based on a few issues. One
issue was that unnecessary suffering was draining community resources and
depleting the social attitude. The employed worker had access to health care
through public services and friendly societies; however, his family was
unattended. Soaring costs prevented many individuals from receiving adequate
care. Cost of insurance and general care were soaring because the paying
customers were absorbing unpaid needy customers bills. When the initiative of a
73

national health service was presented law makers were surprised that most citizens
were in favor of it even with tax increases.
In the United States the paying customer is burdened with increasing bills
for the same reasons that existed in Great Britain. Accumulating costs from non-
paying customers are dispersed to the paying customer. This practice has caused
increasing hospital bills, doctors bills and insurance costs. Reforming the United
States health care system will stabilize the soaring costs and improve the public
demeanor.
Explanatory Frameworks
Which of the theoretical perspectives is the best approach to understanding
why the United States lagged behind Great Britain and other industrialized
countries in adopting a national plan for social insurance? The socioeconomic
theory explains little because it asserts that strong economic growth necessarily
equals government programs. The United States was economically strong during
the early twentieth century, yet it failed to develop welfare programs. The
statistical basis of the socioeconomic theory do not take into account the historical
and social factors that were preventing reform.
Although the cultural values perspective lends itself to some explanation as
74

to why Americans were resistant to social insurance and British citizens were not
as resistant, it does not take into account other factors. True the individualistic
and racial ideology of Americans prevented reforms, but this approach does not
explain how the policies developed. Similarly, restricting the analysis to political
forces, as the party government theorists do, limits the view of other factors that
were significant. The class struggle model is also too limited.
The neo-corporatist framework appropriately expanded on the above
theories, suggesting that broad system of interests influence policy. However,
organized interest blocks, although very important, were not the only impetus to
change. These theorists do not take into account that less powerful groups and
economic conditions also drive the need for change. Big business, as the welfare
capitalism theorists suggest, is not the sole reason expansive policies were
avoided. Big business played a significant role in both the United States and in
Great Britain; so why did Britain adopt a comprehensive policy and the United
States did not?
The theories that suggest that one or a limited number of outside forces is
the primary determinant of public policy fail to consider that many factors are at
work. The institutional-political process perspective pulls together many
indicators of social change. It does not define one source or one outside pressure;
75

instead it suggests that the state is the major factor. This approach is significantly
better than the other more limited theories; however, it too is limited. The theory
that the state is the main controlling factor, because outside forces must respond to
the formation of the state in implementation of laws, simply suggests that social
change is hinged on an administrative design. It is good that the theorists must
consider many influences, including historic particularities and institutional
structures, but it is not enough to explain the reasons for social change.
Of all the theoretical frameworks, the institutional-political process
approach is the most thorough in discussing the possible reasons for social
insurance development. This perspective appropriately pulls together all aspects
of the above theories in the analysis of public policy evolution. Why Britain and
not the United States adopted national insurance is best explained by incorporating
party politics, economic standing, state structures, cultural values, influence of
factions and other important factors. The institutional-political process approach
attempts to do this in a statistical and historical perspective. This theory is best
suited to explain the development of public policy.
Why did Great Britain develop a comprehensive system sooner than the
United States? Both Britain and the U.S. were experiencing industrial expansion,
economic growth and a call for social reform in the early twentieth century. What
76

factors in these two countries caused them to develop different social programs?
Great Britains Labour party which represented the working class gained
power in the early 1900s. This was a significant event because the Labour party
represented more socialist ideas and pushed for insurance programs. Working
class groups organized a unified front to overcome the inadequacies of the Poor
Laws.
In the United States the workers were under-represented. When labor
groups did rally for change, they could not organize a united platform. Instead
their power was weakened by fighting over political issues and administrative
technicalities. The belief in individualism and the fear of government control kept
the trade unions opposed to social insurance reform.
Ideology was a major factor in these reform movements. Great Britain had
strong individualistic attitudes in the late 1800s which prevented reform, but these
attitudes subsided with the visible suffering of the poor and unemployed. In the
United States, the notion of the "American Dream" and freedom through
capitalism sustained individualism. It was not until after the great depression that
United States citizens began to feel helpless and in need of a social safety net.
The history of the feudal system led to the strict class system in Britain.
The United States was a new country with unlimited possibilities for the poor and
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rich alike. Hard work enabled United States citizens to improve their social
status, whereas, in Britain individuals infrequently moved out of the class in which
they were bom. The sense of opportunity for all citizens in the United States
caused them to keep government out of business. Free trade and business
activities were preserved at all costs. The U.S. government did not regulate
business; nor were taxes supported. In Britain, the citizens were more open to
governmental controls and taxes because opportunities for growth were much
more limited.
The influence of the wars had a great impact on Britains acceptance of
reform. By the 1940s, the British citizen had experienced the worst of destitution.
Their homes and businesses were destroyed, and they were forced to rely on
community support for survival. This was a major factor in the reform movement
of Britain. The United States did not experience destruction in their homeland;
instead they had industrial growth from the war.
After the World War II the people of Britain enacted the comprehensive
National Health System. This was possible because of the psychological factors
precipitated by the war, but also because of the shift in political power. Once the
Labour party got into office, working citizens had a voice for the first time.
Unequal distribution of wealth created a large class of poor or near-poor citizens
78

who had suffered long enough. Slowly the middle class emerged and challenged
the ruling class. To remain in power, the ruling class had to respond to the basic
needs of the working class. In a gradual piecemeal way programs were
developed, until finally the NHS was enacted.
The United States poor did not have a voice until the great depression.
The ideology of freedom and capitalism kept government away from protective
programs. The trade unions believed that they could provide adequately for the
emergency needs of the working class, but discovered this was not true during the
depression. Community and family were the only safety net available. After the
depression, the government had to respond with a plan to protect the national
interest and therefore social security was enacted. A comprehensive system
similar to Great Britains was not created due to the desire to preserve a capitalist
society. Also the inability of the working class to form a powerful platform and
the ability of the American Medical Associations fight against the reform ideas
caused the insurance program to be limited.
Post-war recovery and avoidance of new taxes in the United States
prevented the enactment of social reform. Politicians pushed for partial security
programs that did not include health care reform. The major concern was to cure
the unemployment problems and provide for old age security, not to provide
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comprehensive health insurance. The avoidance of the health packages was
largely due to the desire to keep government intervention low and to avoid
socialistic reforms. It was not until 1965, after many years of bipartisan bickering
that the health programs (Medicare and Medicaid) were enacted. These programs
became possible because of the growing acceptance of the Social Security act and
the subsistence of the fear that this program would cause to much government
intervention. Opponents, largely Republican, responded to constituents needs for
security and to the realization that security in society would lead to a more
productive work force.
The United States will likely reform the social safety net before the twenty-
first century because of many factors now present that were present in Britain
during the early 1900s. The Democratic party and the Clinton Administration is
currently leading the way to a comprehensive health care program. In the past the
Democrats have been the primary source for successful social reform legislation
and the current Administration has had positive public reactions to the new
proposals. As was the case in Britain, the middle and upper-class of the United
States are shouldering the burden of supporting the poor through high insurance,
doctor and hospital bills. Also, a shift in political power to a more liberal base
has recently occurred in the U.S. In Britain, the shift in power to the liberal
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Labour party was essential to getting the reforms implemented. Finally, the fall
of the Iron Curtain in the 1980s has cause a significant downsizing of the United
States military. This downsizing has freed up large military budgets which can
now go to economic and social reform. The increase in unemployment, due to the
reduction in military force, could be counterbalanced by increasing the number of
jobs available in social programs. After World War n, Great Britain did not have
huge military budgets; instead the money was used to rebuild the country and to
create social programs.
In addition to the above factors, United States will be compelled to respond
to the needs of the growing elderly population. The Clinton Administration has
established a strong platform for national health care reform. Public opinion has
shifted away from the individualistic attitudes of the past and is now poised to
insist on reform.
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APPENDIX B
TABLE B.l THE BRITISH AND AMERICAN ECONOMIES IN THE
NINETEENTH CENTURY
Proportion of labour force engaged in manufacturing industry, mining and
building 1850-1-1930-1
1850-1 1900-1 1930-1
Britain 43% 46% 45%
U.S.A. 20% 27% 26%
Source: Abstract of British Historical Statistics: Historical Statistics of U.S. and
Output. Employment and Productivity in the United States. N.B.E.R., 1966, pp.
119-20.
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APPENDIX C
Presidential Statement upon Signing the Social Security Act
(August 14, 1935)
Today a hope of many years standing is in large part fulfilled. The
civilization of the past hundred years, with its startling industrial changes, has
tended more and more to make life insecure. Young people have come to wonder
what would be their lot when they came to old age. The man with a job has
wondered how long the job would last.
This social security measure gives at least some protection to thirty
millions of our citizens who will reap direct benefits through unemployment
compensation, through old-age pensions and through increased services for the
protection of children and the prevention of ill health.
We can never insure one hundred percent of the population against one
hundred percent of the hazards and vicissitudes of life, but we have tried to frame
a law which will give some measure of protection to the average citizen and to his
family against the loss of a job and against poverty-ridden old age.
This law, too, represents a cornerstone in a structure which is being built
but is by no means complete. It is a structure intended to lessen the force of
possible future depressions. It will act as a protection to future Administrations
against the necessity of going deeply into debt to furnish relief to the needy. The
law will flatten out the peaks and valleys of deflation and of inflation. It is, in
short, a law that will take care of human needs and at the same time provide for
the United States an economic structure of vastly greater soundness.
I congratulate all of you ladies and gentlemen, all of you in the Congress,
in the executive departments and all of you who come from private life, and I
thank you for your splendid efforts in behalf of this sound, needed and patriotic
legislation.
If the Senate and the House of Representatives in this long and arduous
session had done nothing more than pass this Bill, the session would be regarded
as historic for all time. (Public Papers and Addresses of Franklin D. Roosevelt
1935, p324 325).
84

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